Archive for April, 2016

Filing Late and Other Ways to Have Your Claim Rejected


One of the biggest mistakes you can make if you incur damage to your business premises is to wait too long before filing the claim with your insurer.

The owners of Dallas Plaza Hotel learned this the hard way last month when a U.S. Circuit Court of Appeals held that the business had waited too long to file a claim with its insurer after suffering hail damage in July 2009.

The court ruled that because the hotel had waited more than 19 months to file the claim, it was impossible for the insurer, American Insurance Co., to ascertain exactly when the damage had occurred.

The hotel’s property policy required that the insured make “prompt notice” of any claims.

American Insurance rejected the claim when it received it in October 2011, saying that there had been so many hailstorms in the area before and after July 2009 that it could not determine what caused the damage or when the damage occurred and, specifically, whether it had occurred within the policy period, which expired in September 2009.

Believe it or not, this is a common problem for businesses and the lesson from this case is that you should inform the insurer as soon as possible after incurring damage that may be covered by your insurance policy.

It is one of many mistakes business owners make in filing claims. The following are surefire ways to risk having your claim denied or disputed by your insurance company:


  1. Not contacting your insurer immediately. Many business owners fail to contact the insurer on time and risk a situation similar to that experienced by the hotel in Dallas.
  2. Failing to document the damage. Take pictures and itemize everything that was damaged. Often, you will have to make repairs immediately to prevent additional damage, or move machinery to a new location. If so, be sure to photograph the original scene to document how it was before you started your clean-up effort. Also take photos of any repairs you make.
  3. Not keeping damaged goods. If your business clean-up includes removal of items such as water-damaged merchandise, flooring or insulation, keep it all, even if it has to pile up in the parking lot. The damaged materials are all evidence of the impact of the disaster on your business.
  4. Not appealing an insurer’s low estimate of damage. After the claims adjuster inspects the damage the insurance company will give you a damage estimate. If you think it’s too low, you can appeal. We can help you if you feel the estimate is too low.
    Some businesses will hire an outside adjuster to make a second estimate and then the claim will go to mediation for a final resolution.
  5. Not reading your policy. You should understand exactly what your policy covers. For the most part, commercial property policies will not cover flooding or earthquake damage. That kind of coverage will often require a separate policy or rider.
  6. Not being prepared. If your business has suffered damage, you’ll be better off if you know what to do in advance. Some advance steps you can take are:
  • Reviewing your policy to make sure you have adequate coverage.
  • Knowing where your insurance policy is kept.
  • Keeping an extra copy of the policy off premises or in a safety deposit box.
  • Having our telephone number and e-mail address in the contacts on your smart phone, so you can call us immediately if you suffer a claim.

PTSD Claims a Growing Workers’ Comp Problem


An emerging trend in workers’ compensation nationally is workers filing post-traumatic stress disorder claims from events that they experienced on the job.

These events will typically be something traumatic like witnessing a violent event while on the job or the aftermath of a horrific accident – but not always.

Most recently, the Connecticut Supreme Court held that a Federal Express Corp. driver diagnosed with PTSD in part due to his manager’s demands and stress of a really bad day is eligible for workers’ compensation benefits. In that case, William D. Hart vs. Federal Express Corp. et al., the court upheld 47 weeks of temporarily total disability that had been awarded by the state’s Workers’ Compensation Review Board.

Increasingly, insurers have been denying these claims only to be thwarted by workers’ compensation appeals boards or higher courts when the cases are appealed. Courts are increasingly siding with workers and awarding them disability benefits.

For the most part, PTSD claims are filed by police officers or other first responders, but increasingly, employees that witness a violent crime or a horrific accident while on the job are starting to file workers’ comp PTSD claims.

Many states, but not all, allow workers’ compensation claims based on PTSD. In order to qualify for benefits, a worker must have experienced or witnessed a traumatic event while acting in the scope of employment, and then suffer PTSD symptoms that interfere with the ability to work.

Examples of work-related PTSD claims

Some examples of workplace situations that might give rise to a PTSD claim are:

  • A police officer, firefighter or emergency medical technician responds to a horrific or gruesome situation.
  • A construction worker observes a co-worker’s serious injury or death.
  • A teacher witnesses a school shooting.


The individual must also receive a formal diagnosis of PTSD from a psychiatrist or psychologist.


PTSD symptoms can include:

  • Flashbacks
  • Heightened startle response
  • Depression
  • Anxiety
  • Irritability
  • Cognitive decline
  • Nightmares
  • Physical symptoms such as headaches, ulcers, nausea and fatigue


In many cases, PTSD symptoms may not appear until months or even years after the trauma. Many claimants say the symptoms are so severe that they cannot perform their jobs properly, and they may take long periods off from work.


Defending PTSD claims

Under workers’ compensation regulations:

  • The employment must be the “predominant cause” of the employee’s claim.
  • The claim must not arise from a “good-faith personnel issue.”
  • Psychiatric injuries can arise from a specific, traumatic, event-triggering PTSD.
  • Psychiatric injury can be compensable if the worker has a serious physical disability and has been employed at least six months.


If you are faced with a stress or PTSD claim, Safety National Insurance Co. recommends that:

  • When you receive the first report, reach out and communicate to the injured worker immediately. Sometimes the issue may be a misunderstanding or they may just want someone to care.
  • Be proactive, not reactive, with trauma cases. If this is a situation that would cause you traumatic stress, it is probably causing the injured worker traumatic stress.
  • You consider your “confirmation bias” and other biases when collecting statements.
  • You document reactions to personnel actions.



Protect Your Traveling Employees Through Planning, Training

businessman at airport

If you have employees who travel as part of their job, your business has a duty to safeguard them when on the road.

When on the road both domestically and abroad, accidents and other unforeseen events can occur that can put your employee at risk … from a bush crash in a Madrid to coming down with severe gastrointestinal pains in Mumbai.

Meanwhile, political risk is increasing daily, and so is the threat of terrorism, as evidenced by the spate of incidents in Paris, Brussels and San Bernardino.

The duty of care is on the part of the employer that sends its workers on business trips domestically and overseas. They need to ensure that their employees are prepared, trained and safe for these travel assignments.

You can follow these tips to protect your road warriors, which were outlined in a white paper on the subject by Lisbeth Claus, professor of global human resources at Willamette University’s Atkinson Graduate School of Management in Portland, Oregon:


Implement a travel management plan – If you are sending an employee to a new destination, particularly one that may be considered high risk, you should consider giving them a security briefing before they leave. They should be given information on the dangers that they may face in a particular location – from pickpockets and muggings in some large U.S. cities, to kidnapping in South America by a hood masquerading as a taxi driver.

The plan should cover the following areas:

  • Awareness of potential dangers – The employee should be given information on the dangers of the location that he or she is traveling to. Risks vary from location to location, including terrorism or food-borne illnesses.
  • Don’t have a routine – This is especially true in countries where crime and kidnappings are rampant. It’s recommended by security experts that employees on temporary or long-term assignments abroad don’t do the same thing every day. They can take a different route to their work site every day, visit different lunch places and take a taxi one day and a bus another.
  • Don’t draw attention to yourself – Advise your traveling employees to keep a low profile. Don’t wear expensive jewelry or watches or any items with American flags on them. It’s best not to stand out, and they should try to dress like others do in the area to the best extent possible.
  • Stay in touch – You should require that employees traveling in new places check in with a designated company contact on a daily basis, preferably in the morning and upon returning to the hotel in the evening.
  • Think security – There are many simple things a traveling employee can do when on the road to increase their protection, from not straying off main streets at night or in unknown parts of town, to using the deadbolt and swing lock on their hotel doors at all times.


Essentially, you need to:

  • Assess risks – Understand dangers at locations where employees will be assigned or will visit most frequently. Analyze how job functions expose workers to risks.
  • Plan – Determine if your organization is meeting its duty-of-care obligations. Create policies and find resources necessary to meet these obligations.
  • Train – Educate employees about travel dangers and how to react to emergencies while abroad.
  • Track – Know where each employee will be at any given time.
  • Assist – Establish a mechanism to communicate with employees at any time and to provide assistance as needed.



Even if you take precautions, there is still a chance that something can go wrong. That’s why there is kidnapping, ransom and extortion insurance for traveling workers.

You can also purchase a security evacuation and pandemic disease rider to attach to that type of policy.

Other available coverages include:

  • Foreign voluntary workers’ compensation insurance
  • Global medical assistance services


Finally, many insurance companies and brokers have also created country and city risk ratings, which are available on line. They are worth a look if you have traveling workers.


Agency Mulls Not Counting Portion of First Aid Claims in X-Mods

first aid stuff

California’s workers’ compensation rating agency is developing new guidelines that would exempt a portion of first aid claims from being included in the calculation of employers’ X-Mods.

Under state regulations, employers are required to report injuries that require first aid and are not severe enough for the employee to seek medical treatment or miss work. But despite the rules, few employers report the claims to their insurance companies.

The Workers’ Compensation Insurance Rating Bureau hopes that creating an exemption in the experience rating plan for first aid claims and injuries would increase reporting.

According to the trade press, the Rating Bureau is working on a plan that would exclude a portion of every claim from the X-Mod formula. The amount for that exemption has not been set and it’s likely that the change, even if approved this year, won’t take effect until at least 2017 or 2018.

But regardless, the move would be a welcome development for California employers, many of which are reluctant to notify their insurers of any injuries that involve only first aid treatment for fear that it will affect their X-Mod or because they are confused by the rules. The reporting of first aid claims is typically not mandatory in most other states.

The industries in which the lack of first aid claim reporting is most prevalent are the construction and restaurant industries, but it occurs in other sectors as well, according to the Rating Bureau.

When employers fail to report first aid claims it causes problems for claims adjusters, hinders workers’ ability to access workers’ comp benefits and has a negative impact on the employers that play by the rules and report all of their claims.

Also, what starts as an injury that only requires first aid treatment can later develop into a full-blown claim if the initial injury worsens.

According to the trade publication Workers’ Comp Executive, the Rating Bureau is looking at imposing a first aid claim exemption of $250, $500 or $1,000. It has been testing the different amounts and the effects on ensuring reliability of employers’ X-Mods.


Depending on the amount, it would have a substantial impact on reportable claims:

  • The $250 threshold would eliminate 15% of the claims in the system.
  • The $500 threshold would eliminate 36%.
  • The $1,000 threshold would eliminate 54%.


The biggest concern is that eliminating so many claims could reduce the rating system’s ability to accurately predict system costs and set accurate rates.

The Rating Bureau expects that at the $250 threshold, the change would mostly affect employers who have no other claims and that it would push up their X-Mod by just one percentage point on average.

The committee studying the issue “thought this was a reasonable trade off to get more claims into the system,” David Bellusci, the Rating Bureau’s chief actuary, said during a classification and rating committee meeting in early April, according to the trade publication.

The perception there is that the honest employers reporting all of their claims, including these smaller first aid only claims, are at a disadvantage to employers that are not currently reporting these claims.

Also, the Rating Bureau plans to work Cal/OSHA in regard to changing the definition of first aid. Cal/OSHA regulations do not require that employers report injuries that require first aid to the agency.


Seven Tips for Navigating a Workers’ Comp Audit


No business ever wants to be audited, but in the world of workers’ compensation insurance it’s a regular occurrence that does not need to be a stressful event.
A workers’ comp audit by your insurer is common for most mid-sized or larger employers, and the audit threshold in California is $16,000 or more in annual premium.
While many employers are used to audits and have their procedures and policies in place to ensure a smooth experience, some of you may be growing concerns that now are large enough to be subject to audits.
The key to a workers’ comp audit is preparation and having your paperwork (and electronic files) in order, so you can produce the required documents swiftly. We’ve prepared the following seven ways to prepare for an audit, and if you follow this advice it can save you stress and perhaps money.

1. Understand why you are being audited. Workers’ comp carriers base your premiums on your number and cost of any previous claims, your industry and your payroll. At the end of the policy, the insurer needs to audit your payroll to make sure that the payroll and class codes that you reported at the inception of the policy were correct and if they’ve changed during the last year. Remember that an audit can go both ways. The insurer’s auditor will be looking to see if you either owe or are owed money. You may have underestimated your payroll or incorrectly classified employees, or you may have overpaid due to similar classification errors.

2. Gather all records and paperwork requested by the auditor, and ensure that your documentation is in order. You’ll most likely be asked for the following:
• Employee records
• Payroll records
• Cash disbursements
• Certificates of insurance
• A detailed description of your business operations

3. Review prior audits. When you are preparing for an audit, go back further than your current policy year’s documents. Categorizing your employees correctly is what’s most important to ensure a smooth audit and not be hit by surprises. Knowing how your employees have been categorized in the past can help you make sure they’re categorized correctly in future audits.

4. Double-check the categorization for employees of subcontractors. This is one of those situations in which many small businesses have been overcharged by thousands of dollars in a single year because of an error. If your subcontractors carry their own workers’ compensation insurance, you aren’t responsible for paying premiums for them. If they don’t, you could be responsible for the exposure under your policy.

5. Don’t forget to keep track of overtime for your employees. Premiums are not calculated against the full overtime pay rate. Your workers’ compensation premiums aren’t calculated at a full overtime pay rate. Typically, the auditor will break out overtime pay and discount it to straight time. This is another situation that can cost you unnecessarily if your records aren’t accurate.

6. Don’t volunteer more information or records than the auditor asks for. This will help keep the audit focused and moving along, and avoid adding confusion and more questions that aren’t relevant to the audit.

7. Ask the auditor for the worksheet when the audit session is done, and then have us review it for accuracy. If you suspect there are mistakes in the worksheet, it’s your right to ask for a corrected audit.

Spending some time preparing for your next workers’ compensation audit is a worthwhile investment. With workers’ comp being one of your biggest expenses, you should not be paying any more than you need too, especially due to a small mistake.

Does Business Interruption Insurance Cover Partial Shutdown?


What happens if your business suffers property damage or a supply chain disruption and is forced to stop operations either fully or partially? Will your insurance cover the work stoppage or slowdown?

It is important to understand how your insurance can protect you from the resulting financial loss. In addition to potential recovery for property damage from your property/casualty policy, you may be able to recover lost revenue from your business interruption coverage. If your operations are disrupted – completely or partially – the language of your policy will determine if, and for how long, your insurance company will cover the loss.

In the best scenario, your insurance should cover income loss not only when operations are completely shuttered, but also when your business is partially suspended.

Historically, many business interruption provisions required a “necessary suspension” of operations. The problem is that these older policies and forms did not define “suspension” or state whether a complete shutdown was necessary. Courts have wrestled with this issue, and have often come down on the side of a “complete shutdown.”

The precedent in California is the case of Buxbaum vs. AETNA Life & Cas. Co., which held that a “necessary suspension” of operations “connotes a temporary, but complete, cessation of activity.”

In this case, the court said that business interruption coverage for a law firm was not triggered because there was no complete cessation of operations when evidence showed that its attorneys continued to bill hours following a water damage incident in its offices.

The key here is that if “suspension” is not defined in a policy, the policyholder will likely not recover lost income due to a partial cessation or slowdown of business.

The catch-22 in this type of interpretation is that the business interruption policy will usually include a clause obligating the policyholder to mitigate losses.


Slowdown coverage in new forms

In light of other states’ court decisions that were similar to the California case, the industry has developed new forms that also cover slowdowns.

One such form is the Insurance Service Office-approved “Business Income (and Extra Expense) Coverage Form.” It was updated to define “suspension” as “[t]he slowdown or cessation of your business activities.”

Fortunately, most insurance companies use forms that affirmatively state the policy “shall cover the loss resulting from complete or partial interruption of business.”

If you are renewing your business interruption policy or purchasing a new policy, ask us if the form the insurer uses includes the above language. If not, we can find an insurer that includes such wording.

That specific language can ensure that you get paid for any lost business income due to a partial shutdown of your operations.

Agency Recommends Further Rate Cuts for California Employers

3d illustration of scissors cutting golden dollar sign, over white background

The reforms that were ushered in by the state Legislature in 2012 seem to be paying off, with the Workers’ Compensation Insurance Rating Bureau of California recommending that benchmark rates be cut by an average of 5% in July.

The Rating Bureau has forwarded its recommendation for a mid-year rate cut to the California Department of Insurance, and the insurance commissioner will hold a hearing on the filing likely in May. The filing was made in reaction to lower-than-expected medical cost development, as well as the cost of indemnity benefits per claim.

The Rating Bureau is recommending that the average rate that California employers pay for workers’ compensation coverage be adjusted downward to $2.30 per $100 of payroll. That’s 5% lower than the official benchmark rate as of Jan. 1 and 10% lower than the average rates that insurers had on file on Jan. 1.

If the insurance commissioner agrees with the recommendation and he reduces the official benchmark rate, the new rate will apply starting July 1.

Insurers are free to file their own rates and they use the official benchmark rate as a guide-post for pricing their policies.

Rates will vary across industry sectors, and more often carriers have been adding surcharges on policies for employers in certain regions, such as Southern California.

Besides some costs decreasing, the Rating Bureau noted that there are also some upward cost pressures – such as insurers’ overhead costs of adjusting claims, and fees paid to outside attorneys, experts and investigators. There was also a 91% increase in lien filings in 2015.

SB 863, passed by California legislators in September 2012, increased benefits for injured workers as of January 2013 and included a number of changes intended to reduce system costs.

Those included an independent review process for medical treatment and billing disputes, fee schedules for home health care, language interpretation and other comp-related services, and fees for lien filings.


New Workplace Notice Requirements Take Effect

one caucasian business woman man couple dispute conflict  in silhouette studio isolated on white background

IF YOU have more than five employees you are required to have in place as of April 1 anti-discrimination, anti-harassment and complaint investigation policies.

You are also required to post starting April 1 a notification to your employees about California’s pregnancy disability leave law.

The regulations, updated by the California Fair Employment and Housing Council, were spurred by recent court decisions. If you have not done so, now is the time to review your anti-harassment, discrimination and retaliation policies.



Steps You Need to Take Now

  • Include a mechanism that permits employees to complain to someone other than his or her immediate supervisor, such as a human resources manager or other supervisor, a complaint hotline, or an ombudsperson. It should also include contact information for the California Department of Fair Employment and Housing and the U.S. Equal Employment Opportunity Commission as additional avenues for employees to lodge complaints.
  • State that you will conduct a fair, timely and thorough investigation and that all parties will be given due process.
  • State that you will ensure that you will keep the matter confidential to the best extent possible, but not that it’s completely confidential.
  • Require supervisors to report complaints of misconduct to a designated person, such as a human resources manager.
  • Have a mechanism for remedial measures if you find misconduct.
  • Assure your workers that you will not retaliate against them for filing a complaint.


Ant-harassment Policy Basics

  • Set the policy in writing.
  • List all current protected categories covered under the Fair Employment and Housing Act.
  • Indicate that the FEHA prohibits not only supervisors and managers from engaging in prohibited conduct, but also co-workers and third parties with whom employees come into contact.
  • Create a complaint process to ensure that complaints receive the following:

–           Designation of confidentiality, to the extent possible.

–           Timely responses.

–           Impartial and timely investigation by qualified personnel.

–           Documentation and tracking for reasonable progress.

–           Options for remedial actions and resolutions.

–           Timely closure.


Pregnancy Disability Notice

Starting April 1, if you have five or more employees you are also required to post the “Your Rights and Obligations as a Pregnant Employee” notice alongside all of your other mandatory employment-related postings at your workplace.

You can find a copy of the new poster from the state at this website:

Employers with 50 or more workers will continue to be requried to post the “Family Care and Medical Leave and Pregnancy Disability Leave” notification that has been required since July 2015.

Vehicle Crashes on and off the Job Cost Employers Dearly


The costs for businesses when their employees are involved in car accidents on and off the job are staggering, at $47.4 billion a year, according to a new study.

The “Cost of Vehicle Crashes to Employers – 2015” study, by the Network for Employers for Traffic Safety, looked at how much car crashes cost businesses in terms of workplace disruption and liability costs. While the costs to companies when their workers are in on-the-job automobile accidents are easily measured, the costs to businesses when their employees miss work after accidents while off the job are almost as steep.

Employers end up paying in some way for injuries to their employees on and off the job, and to their dependents. They also pay for injuries caused to third parties who are injured when an employee is involved in an accident while driving on the job.

In 2013, motor vehicle crashes killed 1,620 people and injured an estimated 293,000 while they were working, the study found. More than half of the injuries forced people to miss work.


The report, funded by the U.S. Department of Transportation, found that:

  • Costs totaling $20.6 billion were due to property damage, workplace disruption and liability costs.
  • Another $26.8 billion in costs to employers were due to health-related fringe benefits, including sick leave, health insurance and insurance covering work losses. They cover contributions to workers’ compensation

insurance, health insurance, sick leave, Social Security disability insurance, life insurance, and private disability insurance, as well as insurance administration and overhead.

  • Of those costs, fringe benefit costs of off-the-job crash injuries were $21.8 billion, accounting for 81% of the health-related fringe benefit bill.
  • The fringe benefits payments were split roughly equally between health care expenses and wage replacement, such as sick leave and life insurance, according to the report.
  • On- and off-the-job motor vehicle crashes involving employees or their dependents cost employers more than 1.6 million lost work days in 2013, and 90% happened outside of work, according to the analysis.


The top four causes of the accidents were speeding, distracted driving, driving under the influence of alcohol, and not wearing a seat belt.


What can you do?

The U.S. Centers for Disease Control has the following tips for employers:

  • If you have a fleet, implement a fleet driver safety program and maintain complete and accurate records of workers’ driving performance.
  • Check driving records of prospective employees and conduct periodic rechecks after hiring.
  • Ask your workers to periodically provide documentation of their insurance and to report any suspensions, revocations and convictions for vehicle-related offenses.
  • Establish schedules that allow drivers to obey speed limits and follow hours-of-service regulations where they apply.
  • Require newly hired workers to attend performance-based defensive driving courses, with mandatory refresher training at regular intervals.
  • Implement a driver safety program that emphasizes the link between driver safety at work and driver safety at home. Safe driving in the workplace benefits the worker’s family by reducing the risk of fatality or disabling injury. In addition, lessons learned on the job can increase workers’ awareness of the importance of safe driving outside of work hours.
  • In your training emphasize the need for wearing a seatbelt at all times.
  • Have a zero-tolerance policy for talking on the phone and texting while driving, both of which are already against the law in most states. Require that any employee who needs to make a call, pull over first when it’s safe to do so, regardless of whether they have a hands-free unit.